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Trade surpluses likely in 2017: economists

AAP logoAAP 6/01/2017 Marty Silk

Australia recorded its first trade surplus in nearly three years in November and is likely to stay in the black into 2017.

The surplus of international good and services was $1.2 billion in the month, much better than the market forecast of a $500 million deficit.

The Australian Bureau of Statistics said exports surged eight per cent in November, while imports were flat.

The main driver of the leap in exports were coal and iron ore exports, surging 26 per cent and 11 per cent, respectively.

CommSec chief economist Craig James said a "double whammy" of stronger commodity prices and the low Australian dollar that was behind the swing to a surplus.

"Not only is mining production at record highs, but iron ore, coal and metal prices have soared in recent months," he said.

"The Aussie dollar has also weakened from highs near 78 US cents in early November to 72-74 US cents currently, providing further assistance to exporters."

While it was impressive result for the trade balance, Royal Bank of Canada analyst Michael Turner said it wouldn't have lasting implications.

He pointed out that commodity prices had already begun to moderate in recent weeks and, as investors in the mining sector were cautious, it would have little impact on future activity.

"There are, however, reasons for cautious optimism given that the data have begun to show the fruits of LNG investment and the weaker Australian dollar still appears to be helping the service sector," Mr Turner said.

However, Mr James was more optimistic saying the trade surpluses were on the cards in 2017 and they could lift gross domestic product.

He said the recent gains in oil, iron ore and coal prices were yet to feed through to export receipts, liquefied natural gas exports were set to ramp up and the bumper 2016 winter crop was also due to be harvested and exported this year.

"The Australian trade data have few implications for interest rates or investors. Still, what will be worth watching is the extent to which exports lift in coming months and serve to boost Australia's economic growth performance," Mr James said.

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